Cross-border mergers & acquisitions with financially constrained owners
(2017) In Review of World Economics 153(3). p.433-456- Abstract
Mergers give acquirers control over the assets of the merged entity and give sellers control over financial assets. We propose a cross-border merger model with home biased financially constrained owners in which the subsequent investments of the buyer and the seller can be determined. We show that policies blocking foreign acquisitions to protect the domestic industry can be counterproductive. Foreign acquisition can increase domestic owners’ investment in growth industries by reducing their financial restrictions. This calls for a “financial efficiency” defence in merger law. We also show that cross-border M&As are partly driven by the seller’s alternative investment opportunities.
Please use this url to cite or link to this publication:
https://lup.lub.lu.se/record/4d8fe83b-77df-4c15-8f52-801fd4fdb4a7
- author
- Berg, Aron LU ; Norbäck, Pehr Johan and Persson, Lars
- organization
- publishing date
- 2017-08
- type
- Contribution to journal
- publication status
- published
- subject
- keywords
- Corporate governance, Investment liberalization, Mergers & acquisitions, Ownership
- in
- Review of World Economics
- volume
- 153
- issue
- 3
- pages
- 433 - 456
- publisher
- Springer
- external identifiers
-
- scopus:85014915010
- wos:000404158900001
- ISSN
- 1610-2878
- DOI
- 10.1007/s10290-017-0281-5
- language
- English
- LU publication?
- yes
- id
- 4d8fe83b-77df-4c15-8f52-801fd4fdb4a7
- date added to LUP
- 2017-03-23 09:01:43
- date last changed
- 2024-02-29 11:52:23
@article{4d8fe83b-77df-4c15-8f52-801fd4fdb4a7, abstract = {{<p>Mergers give acquirers control over the assets of the merged entity and give sellers control over financial assets. We propose a cross-border merger model with home biased financially constrained owners in which the subsequent investments of the buyer and the seller can be determined. We show that policies blocking foreign acquisitions to protect the domestic industry can be counterproductive. Foreign acquisition can increase domestic owners’ investment in growth industries by reducing their financial restrictions. This calls for a “financial efficiency” defence in merger law. We also show that cross-border M&As are partly driven by the seller’s alternative investment opportunities.</p>}}, author = {{Berg, Aron and Norbäck, Pehr Johan and Persson, Lars}}, issn = {{1610-2878}}, keywords = {{Corporate governance; Investment liberalization; Mergers & acquisitions; Ownership}}, language = {{eng}}, number = {{3}}, pages = {{433--456}}, publisher = {{Springer}}, series = {{Review of World Economics}}, title = {{Cross-border mergers & acquisitions with financially constrained owners}}, url = {{http://dx.doi.org/10.1007/s10290-017-0281-5}}, doi = {{10.1007/s10290-017-0281-5}}, volume = {{153}}, year = {{2017}}, }